How Many BILLIONS are Chinese Banks Going to Need?
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According to reports today, Chinese banks might need to raise as much as 860 billion yuan (about $131 billion) of equity through 2016 in order to comply with more strict capital rules.
Lenders will need about 1.26 trillion yuan (about $192.86 billion) in supplementary capital over the next six years.
The estimates stem from growth of about eight-percent per year, and 15-percent credit expansion over the time frame.
New rules drafted by China's banking regulator mandate that banks maintain a Tier 1 capital ratio of 8.5-percent by the end of 2016. As of 2010, China's top lenders had ratios of 10.1-percent, below the average of 12.3-percent among the nation's 100 largest banks, according to Bloomberg.
Chinese lenders may also be subject to a 2.5-percent buffer should credit growth be deemed excessive. The buffer wasn't used in the fundraising calculation.
In response, banks in China have cut dividend payouts, curbed loan growth, and aimed to expand non-lending business segments.
By 2016, banks globally will be required to have a Tier 1 capital ratio of seven-percent, from four-percent under current regulations.
Lenders will need about 1.26 trillion yuan (about $192.86 billion) in supplementary capital over the next six years.
The estimates stem from growth of about eight-percent per year, and 15-percent credit expansion over the time frame.
New rules drafted by China's banking regulator mandate that banks maintain a Tier 1 capital ratio of 8.5-percent by the end of 2016. As of 2010, China's top lenders had ratios of 10.1-percent, below the average of 12.3-percent among the nation's 100 largest banks, according to Bloomberg.
Chinese lenders may also be subject to a 2.5-percent buffer should credit growth be deemed excessive. The buffer wasn't used in the fundraising calculation.
In response, banks in China have cut dividend payouts, curbed loan growth, and aimed to expand non-lending business segments.
By 2016, banks globally will be required to have a Tier 1 capital ratio of seven-percent, from four-percent under current regulations.
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